The chairman of Chesapeake Energy Corp. wants an apology from Connecticut Gov. M. Jodi Rell — but it’s not likely the Republican governor will oblige.

Rell earlier this month accused the natural gas industry of attempting to drive up prices by cutting off production needed to fill storage, and she asked the chairmen and ranking members of Congress with oversight of the energy industry to begin an investigation (see NGI, Sept. 17). She also cited Chesapeake’s decision that it was “electing” to cut production by 200 MMcf/d and reduce the number of rigs it operates because of low gas prices (see NGI, Sept. 10).

However, the governor based her price manipulation accusation on the proposition that gas storage for winter was lagging, when in fact it already was nearly full.

Chesapeake CEO Aubrey McClendon was quick to respond. He sent a letter to Rell last week, and copies to legislative leaders, pointing out that her letter had contained “incorrect and reckless statements” that indicated “a lack of understanding of the natural gas market” and the role played by Chesapeake, which is one of the largest U.S. gas producers and the most active driller.

“Incidentally,” he wrote, “your continuing refusal to approve any new LNG [liquefied natural gas] importation facilities in your state actually creates upward pressure on natural gas prices, thereby hurting the interests of the very constituents you represent.”

Asked if Rell plans to apologize, spokesman Rich Harris said, “I think we’re going to have to agree to disagree.”

“It’s especially ironic that Connecticut — which has steadfastly refused to allow the construction of an LNG [plant, complains about coal and complains about reliance on foreign oil — would criticize a company in the No. 2 producing natural gas state in the United States that has seen its production and its rig count grow more than any other in the industry,” said Chesapeake spokesman Tom Price.

Raymond James & Associates Inc. energy analyst Kevin Smith said Chesapeake couldn’t control market prices by itself in any case.

Chesapeake’s “small percent of production is not going to be a large driving force on the whole U.S. natural gas market,” said Smith. “The market is too fragmented and Chesapeake’s percent of production is too small for them to be able to effectively move market prices.”

©Copyright 2007Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.